Former Sacramento Capitals owner fires lawyer; sentencing postponed

08/07/2014 2:43 PM

10/08/2014 12:13 PM

The case against Deepal Wannakuwatte was already one for the books: a successful immigrant businessman, owner of a professional tennis team, admitting he had perpetrated one of the largest Ponzi schemes in Sacramento history.

Then on Thursday things turned really crazy.

In front of a courtroom full of investment victims expecting to see him be sentenced to prison, Wannakuwatte fired his lawyer, claiming he had been coerced into pleading guilty. U.S. District Judge Troy Nunley then postponed sentencing indefinitely, apologizing to the victims but declaring their disappointment was trumped by Wannakuwatte’s right to be represented in court by a lawyer.

Wannakuwatte’s decision appeared to leave the case in limbo. Assistant U.S. Attorney Michael Beckwith told the judge it could “undo the plea agreement.”

Whether he’d be able to withdraw his plea seems unlikely, however. William Portanova, a veteran defense attorney not connected to this case, said federal judges typically “refuse to let a defendant change his mind” after they have already pleaded guilty.

Wannakuwatte, 63, the former owner of the now-defunct Sacramento Capitals tennis team, pleaded guilty in May to a charge of wire fraud. Prosecutors said Wannakuwatte conned his victims into investing tens of millions of dollars into his medical supply company, telling them he had lined up enormous contracts to supply surgical gloves to veterans hospitals. The real contracts were a fraction of what Wannakuwatte claimed they were.

Arrested and held without bail since February, the Sri Lanka native arrived for sentencing in handcuffs and an orange prison jump suit. He had his defense lawyer, Donald Heller, hand Nunley a handwritten note. After reading the note silently, the judge said Wannakuwatte charged that Heller “has been intimidating toward him.” The defendant wanted to fire Heller.

Heller told the judge that being replaced was “fine with me.” Afterward, he told a reporter that Wannakuwatte’s claim of intimdation was “absolutely false.”

A well-regarded defense lawyer and former federal prosecutor, Heller said prosecutors had “an overwhelming case” against Wannakuwatte and it was “in his best interest” to plead guilty. If he’d been convicted at trial, he was facing up to 90 years in prison and would almost certainly have died in prison, Heller said. With the plea agreement, he was expected to get 20 years.

During the court hearing, Wannakuwatte sent word through Heller that he has now hired Sacramento defense attorney Philip Cozens. A hearing on the status of the case is set for next Thursday, but no sentencing has been scheduled.

Cozens, reached by phone, said he has to familiarize himself with the voluminous court documents before he can determine a strategy for the case. “I don’t know where we’re going yet until I read the papers,” he said.

The bizarre development left Wannakuwatte’s victims frustrated.

“Look at the amount of money he’s taken out of this community. It’s staggering,” said one of the victims who showed up in court, Mike Hooper. Court records don’t say how much Hooper invested with Wannakuwatte, and he wouldn’t divulge the sum to a reporter.

Hooper said he wasn’t shocked by Wannukawatte’s latest move. “I’ve been putting up with that kind of action from him for 20 years,” he said.

Prosecutors said Wannakuwatte spent years telling investors and bankers that his company, International Manufacturing Group of West Sacramento, had secured $100 million in hospital supply contracts. In truth, the contracts were worth only $25,000, and recently filed court records show the company’s total sales last year amounted to less than $5 million.

Heller said Wannakuwatte pulled in more than $200 million from his victims. Some investors got their money back plus profits, as is customary in a Ponzi scheme; Heller said the net loss has been estimated at $108 million.

When defendants plead guilty in federal court, the judge first grills them under oath about their reasoning. The judge wants to know if the defendants understand their options and “are in fact pleading guilty voluntarily,” according to Portanova.

Wannakuwatte was treated no differently. When he appeared in front of Nunley in early May, he said he was pleading guilty of his own accord and signed a written statement saying “no one has threatened or forced me” to plead.

As part of his plea agreement, Wannakuwatte and International Manufacturing have filed for bankruptcy protection. He has surrendered millions of dollars worth of real estate, including his South Land Park home and properties in Hawaii and Oregon, as well as more than $400,000 held in bank accounts and insurance policies. But it’s considered unlikely that his victims will receive more than pennies on the dollar.

The businessman moved to the United States to play college tennis on the East Coast and became a fixture on the Sacramento tennis circuit after moving to California. When the Capitals ran into financial trouble two years ago, he swooped in and kept the franchise going. But in early February, he announced he was moving the team to Las Vegas because he couldn’t find a permanent stadium in Sacramento.

Two weeks later, he was arrested. The team was ordered shut down by by World TeamTennis, ending a 28-year run.

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